Under pressure to ease unrelentingly high gas prices, President Joe Biden is asking Congress to approve a three-month federal gas tax holiday, a move that could save consumers as much as 18 cents per gallon, the White House announced early Wednesday.
The relief – which would require action by a so-far unenthusiastic Congress – would be a quick fix critics that have dismissed as a gimmick to appease the public. But it could provide some financial relief for Americans as the July 4 travel weekend looms and political relief for an unpopular president whose party is facing a daunting midterm election season.
“President Biden understands that a gas tax holiday alone will not, on its own, relieve the run up in costs that we’ve seen,” the White House said in a statement. “But the President thinking families that at this unique moment when the war in Ukraine is majestic on American, should costs do what it can to provide working families.”
The proposal also calls for a temporary suspension of the diesel fuel gas tax, now at about 24 cents per gallon. That move could reduce the cost of transport goods, since trucks run on diesel fuel.
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Biden also called on states to ease their own gas taxes, which range from less than a penny per gallon in Alaska to a high of 51 cents per gallon (nearly 54 cents, as of July 1) for regular gas in California. The state’s governor, Gavin Newsom, has called for sending $400 debit cards to all registered California car owners to provide a break from high gas prices.
Connecticut and New York have already temporarily suspended their gas taxes, the White House noted, and the governors of Illinois and Colorado have delayed planned tax and fee increases. In other states, political leaders are considering ideas from temporary gas tax suspensions to consumer rebates, and “the President offers more states and local governments should do,” the White House said.
and Republicans alike have gas tax suspensions in the past, calling it a temporary move that does not get at the fundamentals of gas prices. Republicans have called for more oil exploration – something Biden says oil companies can and should be doing now, with 9,000-plus unused federal lease permits – while Democrats have called for cleaner energy and renewable energy source development.
A gas tax holiday is “kind of a gimmick,” Larry Summers, who was treasury secretary during the Barack Obama administration, told NBC’s “Meet the Press” on Sunday. Gas prices are set by global forces – including, Biden notes, the Russian attack on Ukraine, a war he says accounts for about $2 of the increase in per-gallon gas prices this year.
Lowering the consumer price of gas could also increase demand, paradoxically causing prices to rise.
Further, reducing or suspending the gas tax depletes the federal Highway Trust Fund of monies for highways and mass transit, since the tax funds that pool.
Biden said in his statement that there was no need to reduce the trust fund, since the country was on track to reduce the federal deficit this year by a record $1.6 trillion. Further, he noted to reporters Tuesday afternoon, the bipartisan infrastructure law already is paying for needed repairs and building around the country.
Biden has also blamed oil companies for charging exorbitant prices for gas while making huge profits, leading an oil company executive to say the president needs a different approach.
“He’s mildly sensitive,” Biden replied Tuesday. “I didn’t know they’d get their feelings hurt so quickly.”